Mississippi lawmakers have been talking for months about spending some of the Magnolia State’s revenue surplus next year on a tax cut, but that talk has been short on details until this week. On Monday, Gov. Phil Bryant released his budget plan for next year which includes a $79 million tax break for working families via enacting a 15 percent nonrefundable Earned Income Tax Credit (EITC). The EITC would be available for taxpayers if revenues increase by 3 percent annually and the state’s emergency fund is fully funded.
More tax cut proposals are likely to surface in the coming weeks as House and Senate members put together their spending plan for next year. While it is likely we will see much more expensive tax cuts directed to the wealthiest taxpayers in the state, let’s hope lawmakers work to improve upon Gov. Bryant’s plan. Nonrefundable EITCs only benefit low income workers who owe income taxes, but do nothing to offset the high sales and property taxes that hit these families the hardest. Making the credit refundable would help offset those regressive taxes for the poorest Mississippians. In fact, an ITEP analysis found that the governor’s nonrefundable EITC proposal would give a tax break to only 9 percent of the poorest MS. But a refundable credit would reach 45 percent of low-income people.
Making the credit refundable would also be an excellent way to put even more money in the hands of working Mississippians who are very likely to spend that money. When speaking about who would benefit from his tax cut plan Bryant rightly said, "They don't bury it in the yard," Bryant said. "They spend it."
While it’s worth celebrating that the Mississippi Governor’s tax cut plan is directed to low-income working families most in need of a break, our friends at the Mississippi Economic Policy Center remind us than any tax cut comes at a cost to public education which is grossly underfunded in the state. The state has cut funding for K-12 schools by 12.3% since 2008. More than $300 million is needed to bring public education spending up to an adequate level, yet Bryant's proposed budget only increased K-12 spending by $53 million.